Another part of the Affordable Care Act delayed for a year

Feb. 10, 2014
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Fire Chief Brian Vragovich in Lebanon, Pa., is concerned that the Affordable Care Act might apply to volunteer fire companies. The Obama administration announced that volunteer firefighters will not be considered full-time employees under the law. / Les Stewart, AP

by Kelly Kennedy, USA TODAY

by Kelly Kennedy, USA TODAY

WASHINGTON - The Obama administration Monday announced another delay in the implementation of the requirement that employers provide health insurance for their employees.

Businesses with more than 50 employees but fewer than 100 will have an extra year to phase in health care coverage of employees who work more than 30 hours a week, Treasury Department officials said.

Employers with more than 100 employers will be subject to employee-coverage rules under the Affordable Care Act beginning in January 2015. The mandate to provide insurance had already been delayed one year.

Republicans, many of whom co-sponsored a bill asking that the employer mandate be delayed until 2015, immediately denounced the move and called for the delay to be extended to individuals. Anyone who does not sign up for health insurance in 2014 is subject to a fee at tax time. In 2014, that fee is 1% of annual household income or $95 per person, and $47.50 per child. It increases every year.

House Majority Leader Eric Cantor, R-Va., said the president "selectively delays" parts of the law to avoid negative consequences.

"Much like the individual mandate, the business mandate is bad for middle-class families and will harm economic growth, but the answer to this problem is not random unilateral changes, stoking uncertainty," Cantor said.

Stephen Schatz, spokesman for the National Retail Federation, which had come out against the employer mandate and the "30-hour" definition of full-time, said the organization was "generally" pleased about the new delay.

Volunteer firefighters, part-time teachers and adjunct professors who teach less than 15 hours a week will not be counted as full-time employees, according to a rule released Monday.

"While about 96% of employers are not subject to the employer responsibility provision, for those employers that are, we will continue to make the compliance process simpler and easier to navigate," said Assistant Secretary for Tax Policy Mark Mazur. "Today's final regulations phase in the standards to ensure that larger employers either offer quality, affordable coverage or make an employer responsibility payment starting in 2015 to help offset the cost to taxpayers of coverage or subsidies to their employees."

The delay announced last July fueled calls from the law's Republican opponents that the entire law needed to be delayed or repealed, which President Obama and congressional Democrats refused to do. The federal and state exchanges where people can buy health insurance opened on time Oct. 1 but were immediately plagued by outages and glitches that slowed enrollment to a crawl until the site was fixed Nov. 30. Since then, more than 3 million have bought insurance through the exchanges.

The new rule gives employers more time to expand coverage or to provide health insurance if they have never done so before. Those who do not have insurance through their employers may sign up for health insurance at www.HealthCare.gov. Most Americans who make less than 400% of the federal poverty level, or $94,200 for a family of four, are eligible for subsidies to help pay for insurance. Officials say about 2% of businesses have between 50 and 99 employees. About 96% of businesses have fewer than 50 employees.

Businesses with more than 100 employees must offer coverage to 70% of their full-time employees in 2015 and 95% of their employees in 2016.

Employers will need to certify on a form that they did not drop employees to avoid providing coverage.

The change came after input from employers and members of Congress. The new rule determines that adjunct professors should be based on an hour and 15 minutes of preparation outside the classroom for every hour spent teaching in the classroom and that teachers working full-time during the school year do not count as part-time employees if they have the summer off.

Businesses with more than 50 employees would have paid a fee of $2,000 per uninsured employee after the first 30 employees, as well as a fee for employees who receive a subsidy through the exchanges. This comes at a cost to the government: The Congressional Budget Office expected such penalties to bring in $4 billion in 2014, and the new delay causes two years' worth of lost funds.

"For small employers, it's definitely a welcome development," said Susan Nash, a benefit lawyer at McDermott Will & Emery who advises clients on compliance with the law. "For large employers, I think that any relaxation of the requirement for 2015 is welcome."

Businesses were also glad that the guidance came out early in the year, giving them time to make changes, she said.

"The issue that is still controversial is defining an employee as 30 hours or more," she said, though it helps that the rule allows employers to average hours over a 12-month time period. Some retailers worried that hours worked during the holidays shouldn't count if those hours are different from normal working hours.

Companies with fewer than 50 full-time workers are already exempt from the rule.

Christine Pollack, vice president of government affairs at the Retail Industry Leaders Association, also said businesses were glad the rules came in early.

"Retailers appreciate the flexibility in the final rules which provide a roadmap for implementation and will help them prepare for the changes in the way they can provide coverage to their employees and their families," she said.